Seitel Announces First Quarter 2017 Results

May 10, 2017 04:05 PM Eastern Daylight Time

HOUSTON--(EON: Enhanced Online News)--Seitel, Inc., a leading provider of onshore seismic data to the oil and
gas industry in North America, today reported results for the first
quarter ended March 31, 2017.

First Quarter Highlights -

Total revenue was $20.6 million compared to $12.0 million in Q1 2016.

Cash resales totaled $14.0 million compared to $2.7 million in Q1 2016.

Cash flows from operating activities were $14.1 million compared to
$10.7 million in Q1 2016.

Cash EBITDA was $8.9 million compared to $(1.8) million in Q1 2016.

Net loss was $13.4 million compared to a net loss of $13.9 million in
Q1 2016.

“Cash resales of $14.0 million in the first quarter of 2017 showed a
marked improvement over the first quarter of last year,” commented Rob
Monson, president and chief executive officer. “We benefited from the
increase in capital spending by E&P companies as they have gained
confidence in their cash flow outlook and have begun to increase
spending on drilling and completing new wells. The North America land
market continues to strengthen, especially in the Permian and Eagle Ford
unconventional plays, which is where a significant portion of our
seismic data is located.”

Total revenue for the first quarter of 2017 was $20.6 million,
consisting of acquisition underwriting revenue of $6.9 million, resale
licensing revenue of $13.2 million and solutions and other revenue of
$0.5 million. This compares to total revenue of $12.0 million in the
first quarter of 2016, consisting of acquisition underwriting revenue of
$5.0 million, resale licensing revenue of $6.5 million and solutions and
other revenue of $0.5 million. The increase in total revenue between
quarters was primarily due to higher resale licensing revenue. Cash
resales, a component of resale licensing revenue, were $14.0 million in
the first quarter of 2017 compared to cash resales of $2.7 million in
the first quarter of 2016.

Our net loss was $13.4 million for the first quarter of 2017 compared to
$13.9 million for the first quarter of 2016. The decrease in the loss
between quarters was primarily due to higher revenues, partially offset
by higher amortization on our seismic data library and lower income tax
benefit.

Cash flows from operating activities were $14.1 million in the first
quarter of 2017 compared to $10.7 million in the first quarter of 2016.
The increase between the periods was primarily due to increased
collections of cash resales in the first quarter of 2017 resulting from
higher levels of cash resale activity in the fourth quarter of 2016 and
first quarter of 2017, partially offset by payments of 2016 annual
incentive compensation made in 2017 and lower collections of acquisition
underwriting revenue as a result of invoice timing.

Cash EBITDA, a non-GAAP measure, generally defined as cash resales and
solutions revenue less cash operating expenses (excluding severance and
various non-routine items), was $8.9 million in the first quarter of
2017 compared to $(1.8) million in the same period last year. The
increase between periods was primarily the result of higher cash resales.

Selling, general and administrative (“SG&A”) expenses were $5.6 million
in the first quarter of 2017 compared to $6.0 million in the first
quarter of last year. The decrease between the quarterly periods was
primarily due to a $0.9 million decrease in non-routine costs partially
offset by a $0.6 million increase in routine overhead costs. Non-routine
costs in the first quarter of 2016 included $0.9 million in termination
benefits related to headcount reductions; no such charges were incurred
in 2017. The increase in routine overhead costs of $0.6 million was
mainly due to an increase in variable compensation, consisting of
commissions and annual incentive compensation, resulting from higher
revenue and Cash EBITDA in the first quarter of 2017.

In the first quarter of 2017, our net cash capital expenditures totaled
$3.7 million. Gross capital expenditures were $10.8 million, of which
$7.4 million related to new data acquisition projects primarily located
in the Eagle Ford/Woodbine and Louisiana Cotton Valley areas in the U.S.
and in the Montney area in Canada. Our current backlog of capital
expenditures related to new data acquisition projects is $11.2 million,
of which we have obtained cash underwriting of $10.3 million. We expect
the majority of the work on these projects to occur in 2017.

CONFERENCE CALL

Seitel will hold its quarterly conference call to discuss first quarter
results for 2017 on Thursday, May 11, 2017 at 9:00 a.m. Central Time
(10:00 a.m. Eastern Time). The dial-in number for the call is
800-374-2540, Conference ID 81942127. A replay of the call will be
available until May 18, 2017 by dialing 800-585-8367, Conference ID
81942127, and will be available following the conference call at the
Investor Relations section of the company's website at http://www.seitel.com.

ABOUT SEITEL

Seitel is a leading provider of onshore seismic data to the oil and gas
industry in North America. Seitel’s data products and services are
critical in the exploration for and development of oil and gas reserves
by exploration and production companies. Seitel has ownership in an
extensive library of proprietary onshore and offshore seismic data that
it has accumulated since 1982 and that it licenses to a wide range of
exploration and production companies. Seitel believes that its library
of 3D onshore seismic data is one of the largest available for licensing
in North America and includes leading positions in oil, liquids-rich and
natural gas unconventional plays as well as conventional areas. Seitel
has ownership in approximately 45,800 square miles of 3D onshore data,
over 10,000 square miles of 3D offshore data and approximately 1.1
million linear miles of 2D seismic data concentrated in the major active
North American oil and gas producing regions. Seitel has also expanded
into Mexico through reprocessing existing 2D seismic data for licensing
to oil and gas companies. Seitel serves a market which includes over
1,500 companies in the oil and gas industry.

FORWARD-LOOKING STATEMENTS

This press release contains “forward-looking statements” within the
meaning of the federal securities laws, which involve risks and
uncertainties. Statements contained in this press release about our
future outlook, prospects, strategies and plans, and about industry
conditions, demand for seismic services and the future economic life of
our seismic data are forward-looking, among others.All
statements that express belief, expectation, estimates or intentions, as
well as those that are not statements of historical fact, are
forward-looking. The words “believe,” “expect,” “anticipate,”
“estimate,” “project,” “propose,” “plan,” “target,” “foresee,” “should,”
“intend,” “may,” “will,” “would,” “could,” “potential” and similar
expressions are intended to identify forward-looking statements.
Forward-looking statements are not guarantees of future performance, but
represent our present belief, based on our current expectations and
assumptions, with respect to future events and their potential effect on
us. While we believe our expectations and assumptions are reasonable,
they involve risks and uncertainties beyond our control that could cause
the actual results or outcome to differ materially from the expected
results or outcome reflected in our forward-looking statements. Such
risks and uncertainties include, without limitation, actual customer
demand for our seismic data and related services, the timing and extent
of changes in commodity prices for natural gas, crude oil and condensate
and natural gas liquids, conditions in the capital markets during the
periods covered by the forward-looking statements, the effect of
economic conditions, our ability to obtain financing on satisfactory
terms if internally generated cash flows are insufficient to fund our
capital needs, the impact on our financial condition as a result of our
debt and our debt service, our ability to obtain and maintain normal
terms with our vendors and service providers, our ability to maintain
contracts that are critical to our operations, changes in the oil and
gas industry or the economy generally and changes in the capital
expenditure budgets of our customers. For additional information
regarding known material factors that could cause our actual results to
differ, please see our filings with the Securities and Exchange
Commission (“SEC”), including our Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K.

The forward-looking statements contained in this press release speak
only as of the date hereof and readers are cautioned not to place undue
reliance or project future results based on such forward-looking
statements or present or prior earnings levels. Except as required by
applicable law, we disclaim any duty to update or revise any
forward-looking statements, whether as a result of new information,
future events or any other reason. All forward-looking statements
attributable to Seitel, Inc. or any person acting on its behalf are
expressly qualified in their entirety by the cautionary statements
contained or referred to herein, in our Annual Report on Form 10-K, our
Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and
future reports filed with the SEC.

INFORMATION RELATED TO FINANCIAL MEASURES

We report our financial results in accordance with U.S. generally
accepted accounting principles, but believe that certain non-GAAP
financial measures, such as cash EBITDA and net cash capital
expenditures, provide useful supplemental information to investors
regarding the company’s operating and financial performance and are
useful for period-over-period comparisons. Non-GAAP financial measures
should be considered as a supplement to, and not as a substitute for, or
superior to, the financial measures prepared in accordance with GAAP.
Non-GAAP financial measures included in this press release are cash
EBITDA, for which the most comparable GAAP measure is cash flows from
operating activities and net cash capital expenditures, for which the
most comparable GAAP measure is total capital expenditures.
Reconciliations of each non-GAAP financial measure to its most
comparable GAAP measure are included at the end of this press release.

(Tables to follow)

SEITEL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

March 31,2017

December 31,2016

ASSETS

Cash and cash equivalents

$

64,251

$

55,997

Receivables, net

25,417

26,094

Net seismic data library

105,162

115,922

Net property and equipment

1,659

1,709

Prepaid expenses, deferred charges and other

2,079

1,762

Intangible assets, net

900

1,418

Goodwill

182,599

182,012

Deferred income taxes

292

257

TOTAL ASSETS

$

382,359

$

385,171

LIABILITIES AND STOCKHOLDER’S EQUITY

LIABILITIES

Accounts payable and accrued liabilities

$

24,786

$

17,007

Income taxes payable

714

620

Senior Notes

247,167

246,857

Obligations under capital leases

1,469

1,510

Deferred revenue

18,078

15,904

Deferred income taxes

1,645

2,214

TOTAL LIABILITIES

293,859

284,112

COMMITMENTS AND CONTINGENCIES

STOCKHOLDER’S EQUITY

Common stock, par value $.001 per share; 100 shares authorized,

issued and outstanding

—

—

Additional paid-in capital

400,580

400,582

Retained deficit

(296,569

)

(283,190

)

Accumulated other comprehensive loss

(15,511

)

(16,333

)

TOTAL STOCKHOLDER’S EQUITY

88,500

101,059

TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY

$

382,359

$

385,171

SEITEL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited)

(In thousands)

Three Months EndedMarch 31,

2017

2016

REVENUE

$

20,595

$

11,950

EXPENSES:

Depreciation and amortization

22,263

15,101

Cost of sales

10

22

Selling, general and administrative

5,646

5,959

27,919

21,082

LOSS FROM OPERATIONS

(7,324

)

(9,132

)

Interest expense, net

(6,210

)

(6,356

)

Foreign currency exchange gains (losses)

(51

)

173

Other income

—

6

Loss before income taxes

(13,585

)

(15,309

)

Benefit for income taxes

(206

)

(1,445

)

NET LOSS

$

(13,379

)

$

(13,864

)

Cash resales represent new contracts for data licenses from our library,
including data currently in progress, payable in cash. We believe cash
resales are an important measure of our operating performance and are
useful in assessing overall industry and client activity. Cash resales
are likely to fluctuate quarter to quarter as they do not require the
longer planning and lead times necessary for new data creation. Cash
resales were $14.0 million in the first quarter of 2017 compared to $2.7
million in the first quarter of 2016.

The following table summarizes the components of Seitel's revenue (in
thousands):

Three Months EndedMarch 31,

2017

2016

Total acquisition underwriting revenue

$

6,913

$

4,952

Resale licensing revenue:

Cash resales

14,021

2,698

Non-monetary exchanges

250

222

Revenue recognition adjustments

(1,076

)

3,534

Total resale licensing revenue

13,195

6,454

Total seismic revenue

20,108

11,406

Solutions and other

487

544

Total revenue

$

20,595

$

11,950

Cash EBITDA represents cash generated from licensing data from our
seismic library net of recurring cash operating expenses. We believe
this measure is helpful in determining the level of cash from operations
we have available for debt service and funding of capital expenditures
(net of the portion funded or underwritten by our customers). Cash
EBITDA includes cash resales plus all other cash revenues other than
from data acquisitions, less cost of goods sold and cash selling,
general and administrative expenses (excluding severance and other
non-routine costs). The following is a quantitative reconciliation of
this non-GAAP financial measure to the most directly comparable GAAP
financial measure, cash flows from operating activities (in thousands):

Three Months EndedMarch 31,

2017

2016

Cash EBITDA

$

8,850

$

(1,771

)

Add (subtract) other components not included in cash EBITDA:

Cash acquisition underwriting revenue

6,874

4,951

Revenue recognition adjustments from contracts payable in cash

(1,076

)

3,756

Severance and other non-routine costs

—

(946

)

Interest expense, net

(6,210

)

(6,356

)

Amortization of deferred financing costs

310

318

Current income tax expense

(406

)

—

Changes in operating working capital

5,792

10,737

Net cash provided by operating activities

$

14,134

$

10,689

Net cash capital expenditures represent total capital expenditures less
cash underwriting revenue from our clients and non-cash additions to the
seismic data library. We believe this measure is important as it
reflects the amount of capital expenditures funded from our operating
cash flow. The following table summarizes our actual capital
expenditures for the three months ended March 31, 2017 and shows how net
cash capital expenditures (a non-GAAP financial measure) are derived
from total capital expenditures, the most directly comparable GAAP
financial measure (in thousands):

Three MonthsEndedMarch 31, 2017

New data acquisition

$

7,423

Cash purchases and data processing

2,998

Non-monetary exchanges

250

Property and equipment

136

Total capital expenditures

10,807

Less:

Non-monetary exchanges

(250

)

Cash underwriting revenue

(6,874

)

Net cash capital expenditures

$

3,683

Contacts

Seitel, Inc.Marcia Kendrick, 713-881-8900

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